As recently as the early 1980s, central bankers around the world could be heard moaning and groaning about having to hold physical gold reserves to back up their currencies. The trouble, expense and potential loss of picturesque cast metal in a world of infinite fiat money and digital bytes reflecting off satellites. It’s a trend: citizens would be amazed to learn that only around 8% of the money working as the lifeblood of economies around the world is in the form of coins and banknotes. Folding money is considered old-fashioned.

A banker might roll his eyes and joke to a colleague: “Imagine, we are continuing to pay out good money to pile up these shiny precious metal ingots in a vault, with armed guards. What is this, the Roman Empire?”

You do not hear that in the new Millennium. Disparagement of gold bullion has quieted, in an age of terrifying global debt overhang and failing trust in eqforeign counterparts and fiat currencies. As the world’s economies glide past an estimated one quadrillion dollars in debt instruments, and inflation eats away at everyone’s assets (but not those of the gold bugs and their holdings, notably, as gold, as recently as the 1970s going for US$ 32/oz., zips past US$ 2,000) the usefulness and credibility of the so-called “petrodollar” look increasingly unappetizing.

This would have been unthinkable had it not been for the foundation of the BRICS Group of nations. Its most unlikely beginning was with avaricious Goldman Sachs – of all people – who proposed a grouping of China, India and Russia, in mutual economic interest, pointedly excluding the USA, the “center of everything” since the end of World War II in 1945.

Hu Jintao, Manmohan Singh and Vladimir Putin got together on the sidelines of the 2008 Group of 8 (G8) meeting in St. Petersburg. Russia, now blackballed because of its “Special Military Operation” in Ukraine, was a G8 member, while India and China attended the gathering as part of a purported G8 “outreach” to emerging economies.

In 2009, the first summit of “BRICs” countries (excluding South Africa) took place in Russia. In 2010, at a foreign ministers’ meeting, the initial four agreed to invite South Africa, a formidable economic power on the continent.

By 2011, now a five-country organization—with the “S” now standing for South Africa— formed up, mostly in aversion to the increasingly inconvenient burden of dealing in dollars. Joining together with a BRIC Currency could alleviate the heavy burden incurred by US dollar-denominated debt, in a zero-sum game, always favoring the wealthy western economies: interest rates soared, as the US Fed struggled against inflation.

About this time, certain countries quietly started selling their USD reserves and stowing away tons of shiny gold bars. Note that it was not simply the “mavericks” who did not care for the damage inflicted on their economies by the Fed: the Finance Minister of Norway, never thought of as “anti-American” nation, publicly belly-ached about having to sell his country’s precious hydrocarbon reserves in dollars.

The other alarming factor was the lethal weaponization of the dollar. With the ignominious ouster of the Shah of Iran and the subsequent hostage crisis, billions of dollars of Iranian assets were “frozen” in the USA. When the Federal Republic of Germany went to reclaim their gold bullion from the Bank of New York they were first brushed off and later found many bars had been melted down and recast.

Around the planet, Uncle Sam began to be perceived as an unreliable, if not unscrupulous relative, who would turn on you and pocket your valuables if you did not behave his way. Whatever happened to Khaddafi’s tons of gold, spirited off by NATO pirates?

The buzzword was “dedollarization”. Appealing though the notion might be to those whose billions are locked away by Washington, it is worthwhile to pause and consider how much time went by and effort was expended in setting up the Euro. The EU, certified in 1957 by the “Luxemburg Treaty”, took a full forty-two years of hard work, before Maastricht was hammered out, in 1999.

The most recent BRICS Summit, hosted by President Cyril Ramaphosa of South Africa in August of this year, received endorsement from outliers like Algeria, Argentina, Bahrain, Bangladesh, Egypt, Indonesia, Iran and Saudi Arabia.

Member countries might be active in their economics, trade, and finance relationships, including payment protocol, but it is an unbalanced interdependence, pitting a behemoth like the PRC against, say, Argentina. An advanced economy cannot create a common currency with a primitive one, as one is too dependent on the other: interdependence implies balance. Politics alone won’t do the job.

Bear in mind that with all the grunting and shoving toward de-dollarization, currency trading in USD still constitutes 88 per cent of the total. Global reserves sit at 60 per cent in USD, 20 per cent in Euros and only 2 per cent in Renminbi. National debts are mostly in USD. It was amusing to watch Argentina hurriedly swap their Renminbi, disbursed after a recent large purchase from the PRC, for billions of dollars.

ASEAN gave it a shot, looking to set up the “Asian Currency Unit” (ACU); that yielded nothing, except for a convenient swap facility, eventually known as “Local Currency Settlements” (LCS), still functioning as of this writing.

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Uzbekistan is marching forward with its digital currency regulatory sandbox and is keen on exploring the option of digital currency cards for consumers.

In a statement issued by the country’s National Agency for Perspective Projects (NAPP), the regulator confirmed the grant of approvals to two commercial banks to issue plastic digital asset cards.

The statement names Kapital Bank and Ravnaq Bank as participants in the pilot project involving digital asset cards. Dubbed UzNEX, global financial services provider Mastercard (NASDAQ: MA) will power the cards to allow for on and off-ramp fiat transactions from selected digital currency platforms.

The pilot will see both commercial banks probe the integration of digital asset cards with existing banking systems and Mastercard’s payment system. NAPP is eyeing a test rollout of the offering from both commercial banks before the end of the year as it looks to improve the state of digital currency services in the country.

“The participants of the special regime will test the solution for integrating the automated banking system, the information system of the crypto-exchange, the processing center of the bank, and the MasterCard international payment system,” NAPP’s announcement read.

Kapital Bank and Ravnaq Bank made NAPP’s exclusive list of firms selected to participate in the “Special Regulatory Sandbox Regime.” The only other firm taking part in the pilot is state-owned technology outfit Uzinfocom deployed to experiment with non-fungible token (NFT) certificates for names in the “.UZ” domain.

Uzinfocom’s study with NFTs began at the tail end of April, with a test launch in May, which was a considerable success.

After years of operating with a free rein, Uzbekistan’s regulators began tightening the screws for digital asset service providers in the country. The first victims of the crackdown were global players like Binance, Bybit, Huobi, and the defunct FTX, with the affected firms scrambling to begin negotiations with Uzbek authorities.

The crackdown extended to miners in the country as it began a crusade against illegal mining entities while training a specialized unit to combat digital asset crimes.

Even tighter restrictions for industry players

In October 2022, the country ordered digital currency exchanges to pay $11,000 monthly to support the national budget. Individual miners are expected to pay $270 monthly, while mining pools and custody service providers must pay $2,700 and $135, respectively.

“Failure to pay the fee within one month constitutes grounds for suspension of the license,” read the announcement. “If the company does not pay the fee for two months within a year, the license may be canceled.”

With a new digital currency regime in place, firms are expected to apply to the NAPP for operational licenses or face strict penalties for operating outside the purview of existing regulations.

Source: Coingeek

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Wishing to keep their savings, Kazakhstanis resort to various financial instruments. Some, for example, prefer to keep money on deposits in banks. According to analysts, this method turned out to be one of the most effective. 

Others, for this purpose, acquire foreign currency, which in some cases may be more stable than the tenge. However, there has been a noticeable decline in the foreign exchange market. 

According to the National Bank of the Republic of Kazakhstan , in April of this year, net sales (sales minus purchases of currency by exchange offices) of foreign currency in Kazakhstan amounted to 84.3 billion tenge. 

For comparison: a month earlier, this figure was equal to 146.7 billion tenge , and in April 2022 – 226 billion tenge . In other words, demand for the year sank by more than 62.7%. 

What currency did the people of Kazakhstan buy? 

It is worth noting that demand fell for all major foreign currencies. For example, “net” sales of US dollars in April amounted to 73.2 billion tenge , while a year ago this figure was as much as 189.2 billion tenge. 

Moreover, in four regions of the country at once – in Abay, Akmola, East Kazakhstan and Zhetysu regions – the population sold dollars more often than bought, and thus the net sales of the American currency here were negative. 

A similar situation is observed with the euro. Its net sales in April amounted to 11.3 billion tenge against 24.6 billion tenge a year earlier. 

As for the Russian ruble, here sales turned out to be completely negative – minus 653.3 million tenge. Most often, they “got rid” of it in Almaty, where net sales amounted to minus 2.95 billion tenge. 

It should be noted that since the beginning of this year, the ruble only once, in March, went “in plus”, when its “net” sales amounted to 60.1 million tenge. In January and February they were negative – minus 7.3 billion and minus 1.1 billion tenge , respectively. 

For comparison: in April last year, net sales of the ruble amounted to 11.9 billion tenge. In March, this figure was equal to 58.8 billion tenge , in February – 75.4 billion tenge , and in January – in general 80.9 billion tenge. 

In addition to these three currencies, Kazakhstanis also purchased the Chinese yuan, whose net sales in April of this year amounted to 76.1 million tenge , and the British pound – 394.6 million tenge . 

However, these two currencies have not previously been in special demand among the inhabitants of the country. Only once, in March 2022, has there been a noticeable increase in the popularity of the yuan. 

Source:

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